IDEAS home Printed from https://ideas.repec.org/p/udc/wpaper/wp246.html
   My bibliography  Save this paper

Creation and Destruction: Evidence from an Emerging Market

Author

Listed:
  • Oscar Landerretche Moreno

Abstract

We use a panel database constructed from Chilean IRS data to study firm creation and destruction. As expected, larger and more productive firms are less likely to be destroyed; and (also as expected) they are less likely to be created than smaller and less productive firms. They are more likely to reflect the shocks of the economy on sales performance, or in the execution of individual entrepreneurial projects within the firm. For smaller and less productive firms shocks and changes are reflected in survival, destruction or creation. We have shown that ”financial dependence” has different meaning for smaller firms, as reflected in a significant difference in sign of the corresponding parameter. For them it is an indicator of ”financial constraint” and acts in our regressions as a predictor of firm destruction, of bad sales performance and a also as a stronger predictor of firm creation than for larger firms.

Suggested Citation

  • Oscar Landerretche Moreno, 2007. "Creation and Destruction: Evidence from an Emerging Market," Working Papers wp246, University of Chile, Department of Economics.
  • Handle: RePEc:udc:wpaper:wp246
    as

    Download full text from publisher

    File URL: http://www.econ.uchile.cl/uploads/publicacion/df4c7741-43d6-4bc6-be23-3feeba98cb90.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Hoyt Bleakley & Kevin Cowan, 2008. "Corporate Dollar Debt and Depreciations: Much Ado About Nothing?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 612-626, November.
    2. Ricardo J. Caballero & Mohamad L. Hammour, 1998. "The Macroeconomics of Specificity," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 724-767, August.
    3. Ben S. Bernanke & Mark Gertler, 1995. "Inside the Black Box: The Credit Channel of Monetary Policy Transmission," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 27-48, Fall.
    4. Caballero, Ricardo J. & Krishnamurthy, Arvind, 2001. "International and domestic collateral constraints in a model of emerging market crises," Journal of Monetary Economics, Elsevier, vol. 48(3), pages 513-548, December.
    5. Robert E. Hall, 2005. "Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 397-407, August.
    6. Forbes, Kristin J., 2007. "One cost of the Chilean capital controls: Increased financial constraints for smaller traded firms," Journal of International Economics, Elsevier, vol. 71(2), pages 294-323, April.
    7. Robert E. Carpenter & Bruce C. Petersen, 2002. "Is The Growth Of Small Firms Constrained By Internal Finance?," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 298-309, May.
    8. Harris, John R & Schiantarelli, Fabio & Siregar, Miranda G, 1994. "The Effect of Financial Liberalization on the Capital Structure and Investment Decisions of Indonesian Manufacturing Establishments," World Bank Economic Review, World Bank Group, vol. 8(1), pages 17-47, January.
    9. Adam B. Ashcraft & Murillo Campello, 2002. "Borrowers' financial constraints and the transmission of monetary policy: evidence from financial conglomerates," Staff Reports 153, Federal Reserve Bank of New York.
    10. Acemoglu, Daron & F. Newman, Andrew, 2002. "The labor market and corporate structure," European Economic Review, Elsevier, vol. 46(10), pages 1733-1756, December.
    11. Michael Devereux & Fabio Schiantarelli, 1990. "Investment, Financial Factors, and Cash Flow: Evidence from U.K. Panel Data," NBER Chapters,in: Asymmetric Information, Corporate Finance, and Investment, pages 279-306 National Bureau of Economic Research, Inc.
    12. Benavente, Jose Miguel & Johnson, Christian A. & Morande, Felipe G., 2003. "Debt composition and balance sheet effects of exchange rate depreciations: a firm-level analysis for Chile," Emerging Markets Review, Elsevier, vol. 4(4), pages 397-416, December.
    13. Stiglitz, Joseph E & Weiss, Andrew, 1992. "Asymmetric Information in Credit Markets and Its Implications for Macro-economics," Oxford Economic Papers, Oxford University Press, vol. 44(4), pages 694-724, October.
    14. Stephen D. Oliner & Glenn D. Rudebusch, 1996. "Is there a broad credit channel for monetary policy?," Economic Review, Federal Reserve Bank of San Francisco, pages 3-13.
    15. Caballero, Ricardo J & Hammour, Mohamad L, 1996. "The "Fundamental Transformation" in Macroeconomics," American Economic Review, American Economic Association, vol. 86(2), pages 181-186, May.
    16. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:udc:wpaper:wp246. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mohit Karnani). General contact details of provider: http://edirc.repec.org/data/deuclcl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.